INTERIOR DESIGN AT COFFEE SHOP AS A FACTOR INFLUENCING

Prosiding Seminar Nasional AIMIISBN: 978-602-98081-7-9 Jambi, 27 – 28 Oktober 2017

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INTERIOR DESIGN AT COFFEE SHOP AS A FACTOR INFLUENCINGCUSTOMER RETENTION AND MEDIATING ROLE OF PERCEIVED

CUSTOMER SATISFACTION

Misbahuddin Azzuhri; Andre Damarizal Tanjung

Faculty of Economics and Business, Universitas Brawijaya

Email: [email protected]; [email protected]

ABSTRACTThis research aims to determine the effect of Interior Design, Perceived CustomerSatisfaction and Customer Retention on objects which is Captain Coffee Malang insimultaneously and mediation. This research describes the causal relationship between thevariables through hypothesis testing. This research collect data with techniques by usingquestionnaires and literature study. This study used 120 samples are consumers andcustomers of Captain Coffee Malang. Sampling using purposive sampling. Test equipmentused to test the research instruments namely validity, reliability, and classical assumption. Theanalytical method used is the path coefficient analysis. Hypothesis testing using t test usingSPSS program. These results indicate that the interior design has a significant influence oncustomer retention. The interior design also has a significant effect on perceived customersatisfaction. Customer retention also has significant direct effect on customer retention.Interior design significantly affects customer retention through customer retention which isperceived as an object of study mediator in Captain Coffee Malang.

Keywords: Interior Design, Perceived Customer Satisfaction, and Customer Retention..

INTRODUCTIONIndonesia is one of the largest coffee producing country in the world. Hence coffee in

Indonesia has become one of products are exported to other countries. Indonesian societyis also a coffee lovers, even this has become their culture to consume beverage of coffeeevery day. Enjoying coffee culture has become a trend called hang out and drink coffee.Especially among youngsters’ people who really likes to hang out and drink coffee withtheir friends. Until now, drinking coffee culture has become a lifestyle for the people ofIndonesia. Therefore, it is common to find a place to enjoy a cup of coffee from a small shopthat has a cheap price to coffee shop that has an expensive price for a cup of coffee.

Coffee shop is established for people who want to enjoy a cup of coffee. Most coffeeshops provide various types and methods of brewing coffee starting from plain coffee until thespecialty coffee that is usually owned by the coffee shop producing its own homemade coffeeby blending its own coffee. Coffee shop usually gives free internet connection and commonmarketing strategies like discount, free drink, merchandise, and etc. In addition, some coffeeshops change the atmosphere of the café by upgrading the property and stuff to get customers’attention by giving them comfortable and cozy place.

Nowadays, café as a place for eating is known as a master concept of coffee shop that isdeveloped into a sub concept that is café as a place of hanging out. In more detail, café isdemanded to have specific theme like a specific interior design concept. A room that isalready arranged neatly and has a specific theme would look very attractive toconsumers than a room that does not have any character of design. Interior design has aneffect to human psychology that makes customers feel comfortable and feel like at home.Therefore, the main goal of the interior design is the development of function, aestheticenrichment, and improvement in psychological space. The consideration in interior design isthinking about interoperability aspects of a property. Café business owners prefer durableproperties rather than perishables properties.


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The interior design also requires good placement of the right light because the lightprovides an atmosphere of different interest in a room. The most important key in the choice ofinterior design is done by identifying the physical space and room before putting any property.Promotion and advertising is not too effective or maybe even a waste of time when theattempts made is not in line with the store in terms of the way of putting the merchandisingproducts effectively. A good design and in-store promotions are one of the keys to give storethemes and help customers to find the items being advertised.

The purpose of interior display is to develop desire for the merchandise, show what isavailable, and encourage both impulse, show what is available, and encourage both impulse andplanned buying (Bastow-Shoop, Zetocha, & Passewitz, 1991). There are many situationswhere people try to influence other people’s mood by altering the atmospheric of theenvironment. Store atmospheric has more immediate effects on a customer’s in-store behaviorthan do other marketing tools and techniques like advertising, which are not present at thepoint of sale. Every stimulus that happen around can act as an environmental variable, whichthen causes a specific behavior like music or scent in a store may provoke a certain reaction(Ebster & Garaus, 2011). Developing an attractive environment atmospheric is an importantretail strategy to induce certain positive emotional responses and ultimately affect consumerpurchase behavior (El-Adly & Eid, 2016). Customer satisfaction, in turn to be influenced byperceived value. Perceived value, as it has been defined herein, is the ratio of benefits receivedfrom providers relative to the costs sacrificed by customers (Yang & Peterson, 2004).Customer satisfaction is the evaluation of the customer's emotional that describes the level ofcustomer trust to a service that provides positive feelings. Further, the importance of satisfactionon retention is so well recognized that some major economies now measure satisfaction at theindustry level using large sample surveys to predict customer retention and future financialperformance. The more satisfied customers are, the greater is their retention (Fornell, 1992).Retained customers will intent to repurchase a needed product or service from the sameplace and/or brand in the future. In contemporary marketing, it’s argued that satisfaction isinfluenced by cognitive judgments, such as expectations and disconfirmation, and emotionsderived from the pre, during, and post consumption experiences (Oliver, 1994).

Based on this background, then arranged some research objectives. First, to know thesignificant and direct effect of interior design toward customer perceived satisfaction. Second,to know the significant and direct effect of perceived customer satisfaction toward customerretention. Third, to know the significant and direct effect of interior design toward customerretention. Last, to know the significant and direct effect of interior design toward customerretention through perceived customer satisfaction.

METHODThis research uses quantitative approach focusing on hypothesis testing that aims at

knowing the relationship between independent variable toward dependent variable throughintervening variable. This type of research is explanatory research which explains the causalrelationship between one variable with other variables through hypothesis testing. The locationof this research is done in Captain Coffee Malang with the number of respondents 120 people.The sampling technique used in this study is purposive sampling where the specified criteriaare respondents who have had experience of the coffee shop Captain Coffee Malang.

Data were collected using a questionnaire which the instrument research tested withvalidity and reliability. Data were analyzed using SPSS version 21 to determine thecharacteristics of respondents and the distribution of responses. Furthermore, hypothesis testingis done by using path analysis.

RESULTS

Respondent CharacteristicBased on the results of collecting data, the respondents had male sex as many as 79

people or 65,83%, while the women as many as 41 people or 34,17%. This result indicates thatthe respondent of Captain Coffee is experience by both sexes. On age categories, the result


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showed that the majority of customer and consumer in Captain Coffee is in the age between 17-23 years old, which is 38,33% this means that the younger adult people are more likely to spendtheir time to drink coffee in a café and hang out with friends. People in adult age are not reallyspend their time in coffee shop. However, sometimes they looking a new atmosphere to relaxoutside and drink coffee in a coffee shop.

Furthermore, the local visitor becomes dominant that totaling 115 respondents or95,83%, while the rest are foreigners who visited Captain Coffee. Meanwhile, 5 foreign visitorsare exchange students from college that located near Captain Coffee. The highest is incategory Rp 1.000.000-Rp 2.000.000 with 35,83% from all because in Captain Coffee mostlyvisitor is youngster or young adult people who just finished their school and had a standardsalary. Student has the most that the respondent with as many as 39 respondents or 32.50%,followed by entrepreneurship respondent or 32 by 26,66% of all respondents. Both ofoccupation have become the most dominant respondents as the respondent had plenty of time tospare. The majority of educational background of visitors from Captain Coffee is high school.The characteristic of respondent can be seen at Figure 1 and 2.

Figure 1. Characteristic of Respondent Based on Age.Source: Primary Data Processed (2016)

Figure 2. Characteristic of Respondent Based on Occupation.Source: Primary Data Processed (2016)

Validity TestValidity test is a technic to test questionnaire as the instrument used in a research to get

the data which can be considered as valid or not. The researcher analyses the validity ofresearch instrument by entering the items of respondents per each variable to put intocalculation of validity analysis program named SPSS 21 for Windows (Sekaran &Bougie, 2013). The testing of validity instrument in this research are by using Product MomentPearson. The product moment pearson will determined the item if it is valid or invalid withsignificance level of 5% as the critical value. The sig. r indicator each question is smaller than


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0,05 (α = 0,05), which means that each indicator variable is valid, so it can be concluded thatthese indicators can be used to measure the research variables.

Reliability TestThe reliability of measure indicates the extent to which it is without bias (error free) and

hence ensures consistent measurement across time and across the various items in theinstruments. In other words, the reliability of a measure is an indication of the stability andconsistency with which the instrument measures the concept and helps to assess the goodness ofa measure (Sekaran & Bougie, 2013). By using Cronbach Alpha test, an instrument could besaid reliable if the score is greater than > 0,6. Cronbach Alpha measuring the internalconsistency reliability of a group of items. It is measures how well a set of variables or itemsmeasures a single, uni-dimensional latent construct (Andrew, Pedersen, & McEvoy, 2011). Thevalue of the Cronbach alpha for all of the variables is greater than 0,6. From the provisionsmentioned then all the variables used for the study has been reliable.

Normality TestCheck the normality of the data is the first step that must be done for each particular

multivariate analysis, if the purpose is inference. If there is normality, and therefore the residualwill be independent and normally distributed. The difference between the value of predictionswith the actual score or error will be distributed as a symmetry around the value of the meansequal zero. Therefore, the only way to detect the normality of the data was by way ofKolmogorov-Smirnov test (Ghozali, 2011). According to the calculation, the sig. result obtainedis 0,352 and 0,993 or greater than 0,05; then the provisions is stated that the normalityassumption is fulfilled.

Linearity TestAccording to Cooper &Schindler (2008) linearity is an assumption of correlation

analysis, that the collection of data can be described by a straight line passing through dataarray. The method used in testing the linearity is test curve estimation. The second relationshipis said to be linear if the value of the variable significance test is smaller than the alpha (5%)used. Based on the calculation is known that significant value for all variable linearity is 0,00,which means under 0,005. With these results, the data concluded that the model meets thelinearity assumption.Path Model Diagram

Based on the relationship between variables in this study, the model hypothesis data isdescribed as follows.

Figure 3. Path Model

Description:X = Interior DesignY = Customer RetentionZ = Perceived Customer Satisfactione1 = Residue Variable (not discussed)e2 = Residue Variable (not discussed)


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Table 1. Coefficient Test toward Z Variable

Source: Primary Data Processed (2016)

Table 2 .Coefficient Test toward Y Variable


According to Table 1 and 2, Interior Design have significant effect on PerceivedCustomer Satisfaction. Table shows the beta coefficient by 0,697 indicates that the influence ofInterior Design on Perceived Customer Satisfaction, with tcount of 10,568 and probability of0,000 (p<0,05), then the decision of H0 is rejected, means the hypothesis Interior Designsignificant effect on Perceived Customer Satisfaction accepted. Directions positive relationshipindicates that the higher the Interior Design will give rise to the Perceived CustomerSatisfaction. The value of determination coefficient was 0,486 or 48,6%. These results indicatethat the contribution of Interior Design on Customer Satisfaction Perceived are 48,6%, while thecontribution of other variables beyond the study models are 51,4%.

Coefficient Testing Path on Interior Design toward Customer RetentionInterior design give a significant effect on customer retention. Table shows the beta

coefficient by 0,406 indicates that the influence of the attributes of the Customer Retention,with tcount of 4,720 and a probability of 0,000 (p <0,05), then the decision of H0 is rejected,means that the hypothesis Interior Design give a significant effect on Customer Retentionaccepted. Positive directions relationship indicates that the higher the Interior Design will risethe Customer Retention.

Coefficient Testing Path on Perceived Customer Satisfaction toward CustomerRetention

Perceived Customer Satisfaction give a significant effect to Customer Retention. Table4.9 shows the beta coefficient by 0,403 indicates that the influence of Perceived CustomerSatisfaction to Customer Retention, with tcount probability by 4,692 and 0,000 (p <0,05), thenthe decision of H0 is rejected, means that the hypothesis Perceived Customer Satisfaction have asignificant effect to Customer Retention significantly are accepted. The coefficient ofdetermination value is 0,556 or 55,6%. These results indicate that the contribution ofInterior Design and Perceived Customer Satisfaction to Customer Retention by 55,6%, whilethe contribution of other variables outside the model of this study 44,4%.

Path Model InterpretationIn the relationship of Interior Design with Customer Retention there is a presumption of

variables Perceived Customer Satisfaction as an intervening variable. The calculation of theinfluence of Perceived Customer Satisfaction as an intervening variable is as follows:

Structural equation:Y = PYX + (PZX ×PYZ)Direct Effect Interior Design toward Customer Retention is 0.406

Indirect Effect (IE) = PZX × PYZ= 0,697 × (0,403) = 0,281


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Total Effect (TE) = PYX+(PZX × PZY)= 0,406 + 0,281 = 0,687

Testing result on the influence of mediation between intervening variables with dependentvariable are the influence of Interior Design (X) to the Customer Retention variable (Y) throughintervening Perceived Customer Satisfaction (Z) is done by Sobel formula calculation. Theresults of both tests are summarized as follows:P1 = 0,697Se1 = 0,051P2 = 0,403Se2 = 0,060

The magnitude of the standard error of indirect Interior Design (X) to Customer Retention(Y) is the multiplication of the influence of Interior Design (X) toward PerceivedCustomer Satisfaction (Z) with the Perceived Customer Satisfaction (Z) toward CustomerRetention (Y), thus obtained as follows:

Thus the value of the t test was obtained as follows:

In addition, t value of 5.994 is bigger than 1.96, which means that the parameters ofmediation is significant. Thus the model of indirect influence of variables Interior Designof the Perceived Customer Satisfaction through Customer Satisfaction Perceived can be rejected.

Table 3. Summary of Direct Effect, Indirect Effect, and Total Effect

Table 3 is revealed that Perceived Customer Satisfaction is proven as an interveningvariable in the relationship between the Interior Design with Customer Retention. This isproven by the results of the calculation of Indirect Effect that is valued 0.281. The totaleffect of Interior Design toward Customer Retention through Perceived Customer Satisfactionby 0,687. This shows that the improvement Perceived Customer Satisfaction wouldbe a good bridge for relations between Interior Design with Customer Retention.

The Model AccuracyThe accuracy of the model hypothesis of the research data is measured from a

relationship coefficient of determination (R2) in the both equation. The results of the model asfollows:R2model = 1 – (1 – R21) (1 – R22)= 1 – (1 – 0,486) (1 – 0,556)= 1 – (0,514) (0,444)= 1 – 0,2282= 0,7718 or 77,18%

The result of the calculation accuracy of the model by 77,18% explained that thecontribution of the structural model to describe the relationship of the three the variablesexamined is at 77,18%. While the remaining 22,82% is explained by other variables that is notincluded in this research model.


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DISCUSSION

The influence of Interior Design toward Customer RetentionThe result of this research shows that the impact of influence of interior design toward

customer retention interior design is positive and significant. The impact can be seen from theircustomers who feel comfortable and willing to spend a lot more time in Captain Coffee becausethe atmosphere is very comfortable and relaxing. Customer Retention has made customersbecome loyal and certainly, one of the factors that influence the customer is an interestinginterior design and create a cozy atmosphere. As this will make them come back and spend theirtime in places they like.

In the previous research regarding store environment, few researchers have examinedseveral factors that affect customers such as store atmosphere or physical attractiveness thataffects their intentions. The series of store environment factors such as social, design, andambience is possible to influence the customer in their choice decision. There are somechoice decision created by customer like whether they will return to the store, whether they feelcomfortable in the store, whether they would recommend the store, etc. (Turhan, 2014).

The influence of Interior Design toward Perceived Customer SatisfactionBased on the data that has been processed in this study, the result is an interior design

provides a significant and positive impact on perceived customer satisfaction. Interior design isone of important elements in a store or a coffee shop, which is beneficial to give interest tothe customer. In addition, the interior design also provides comfort to the customers. Interestand enjoyment of customers give influence on customer satisfaction. Some customers have acertain taste of satisfaction levels, so that customer satisfaction is not a fixed thing. Eachcustomers have their own perception on what makes them interested and comfortable. CaptainCoffee gives a vintage atmosphere accompanied by antique furniture and decoration items.Customers who like antique and love art will certainly feel comfortable with the interior designthat has been set by Captain Coffee..

The influence of Perceived Customer Satisfaction toward Customer RetentionCustomer satisfaction is a major factor in assessing the quality of service. The higher

the quality level the higher the level of customer satisfaction. The results of this study haveshown a significant and positive impact on the perceived influence of customer satisfactionon customer retention. The behavior of customers who are willing to spend more time atCaptain Coffee and willing to invite other people to go to Captain Coffee can be called as acustomer retention. The benefit is a company does not need to spend too much onmarketing and advertising, because satisfied customers will continue to spread the good newsthat they have experienced in Captain Coffee, it can also be referred as positive word ofmouth. In addition to the size of customer satisfaction, customer retention also has a verystrong influence on the profit, and increasing retention that occurs will result in an increasein profit.

The influence of Interior Design toward Customer Retention through PerceivedCustomer Satisfaction

The results of studies have shown a positive and significant impact on the influence ofinterior design to customer retention through customer satisfaction perceived. The influence ofinterior design has a positive impact on customer satisfaction that will make the customersto come back. The interior design also affects the customer's purchase decision. When thecustomer feel satisfied with what they earn or they expect, then it will create customerretention. This has implications for all customers because the object of this study is coffeeshop.There is partial significant relationship between perceived value and store atmospheric statingthat interior design has a direct effect on the perceived value customer satisfaction andthis is one part of a strategy to create business success. The impact on the effect ofatmospheric store is useful to create customer behavior intentions that will result in customerretention. Favorable environment can motivate behavioral approaches, such as the desire tostay, the desire to look around and discover the environment, and to communicate with the


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people in the environment, while unfavorable environment might have direct approach to theadverse effects of which it is in the form of avoidance behavior (Jalil, Fikry, & Zainuddin,2016).

IMPLICATIONSThis study has theoretical implication for future research in the field of marketing of

customer satisfaction. The satisfaction of the customer is not out of consumer behavior.Consumer expectations of the goods or services have been formed before consumers buygoods and services. Customer satisfaction is very dependent on the perceptions and expectationsof consumers. Consumer expectations influenced by their experience with what they get.Therefore, this study examines perceive customer satisfaction that the customer experience at acoffee shop named Captain Coffee by using interior design as one factor that makes customersfeel satisfied with what they get from the different atmosphere. Perception of customersatisfaction with interior design influenced by environment that makes them comfortable.This study aimed to improve customer satisfaction not just from the environmental sidein Captain Coffee. This study is expected to be the beginning of a search to other factors thataffect customer satisfaction to become customer retention.

Most of customers has an interest in interior design of a coffee shop as their interest inbuying. Therefore, it can be concluded from this study that the interior design is one factor toattract customers. Design on a place where the customer buys or consumes is a significant thingto keep customers satisfied with the creation of positive feelings and comfortable in a place.Effort to design buying environments to produce specific emotional effects on buyers willenhance reviews their purchase probability. The influence of the physical environment isprimarily affective and poorly designed store shopping environment may reduce pleasure.Customer perception in interior design are Become more favorable, they will be more satisfiedwith the store and perceived customer satisfaction will fully mediate the customer retention(Turhan, 2014).

The meaning of customer retention is a customer who has decided to buy a product orservice continuation. Therefore, the relationship between customer retention and perceivedcustomer satisfaction is very close to creating customer loyalty to a company. Captain Coffee isone of the new coffee shop in the city of Malang and do not have a lot of repeat customers. Somany coffee shop and café in the city of Malang will be a challenge for the new establishedcoffee shop like Captain Coffee to create their own market. Because it must be created by acommunity or a loyal customer to increase profitability. Customer retention is also a consumerbehavior that shows signs that have become loyal customers. When it has created customerretention, then the customer will create word-of-mouth that makes them come back to CaptainCoffee and invite other prospective customers.

Customer satisfaction is the most important thing in the business world. Based onresearch that has been processed, Captain Coffee Customers are satisfied with theexisting interior design in Captain Coffee. Satisfaction obtained in this study only coversfrom the atmosphere and environment in Captain Coffee. For further research, it will beexpected to use other factors such as satisfying customer service quality, product quality, socialenvironment, and etc.

The measurement that typically used by managers is customer satisfaction because itcovers all types of products and services. The satisfaction of the customer is stronglyinfluenced by the expectations of customers. Even common behavior from a manager is toimprove a product and services to find customers’ expectations (Keiningham, Cooil, Aksoy,Andreassen, & Winer, 2007).

Perceived customer satisfaction is the behavior of consumers about their hopes forsomething that makes them satisfied. When customers are purchasing an item or service thatthey do not know, then they will have to assume either the mind is good or bad things.Therefore, to get a good feedback, a company must create and meet the desires of whatmakes customers satisfied. Captain Coffee is a new coffee shop, by consequence to attractcustomer satisfaction then it should create something that their customers expect, one of themis a place of comfort. Interior design has an important role in increasing customer


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expectations in the fields of atmosphere and comfort of customers. When the customerexpectations are met, then the higher will be the perceived customer satisfaction.

LIMITATIONSAlthough the research findings provide some insights to researcher, these findings

should be viewed in light of some limitations. To summarize, the limitations associated with theresearch findings are: (1) This study is only shown the significance variables then therespondents who fill the questionnaire cannot be decided as loyal customer who doing customerretention. (2) This study only discusses the influence of interior design. Therefore, this studydid not mention other factors that may can affect perceive customer satisfaction andcustomer retention. (3) When filling out questionnaire, respondents were not guided toanswering all the question in the questionnaire. Some respondent may fill the questionnaire notfrom their actual feeling which is can affect to the result of analysis.

CONCLUSION AND SUGGESTION

ConclusionThe results showed that the variables interior design has a direct influence on the

perceived customer satisfaction, interior design has positive influence on customer retention,perceived customer satisfaction has positive effect on customer retention, interior design haspositive effect on customer retention toward perceived customer satisfaction. Because whencustomers are interested in interior design that make a comfortable atmosphere for them,then they will not hesitate to spend more time in a place they love and it will be create customerretention for the coffee shop.

SuggestionIt is expected that the company can maintain and improve services towards Interior

Design, because the interior design variable has a significant influence on the PerceivedCustomer Satisfaction and Customer Retention, such as by creating a comfortable atmosphereand good social environment to rise the customer retention. This research is also expected tobecome a reference for further research to examine the concept of marketing, especially in thefield of interior design, perceived customer satisfaction, and customer retention. Researchersalso expect future research will be able to discover new things for the development of furtherresearch.

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INTERIOR DESIGN AT COFFEE SHOP AS A FACTOR INFLUENCING